Putting a cap on Dubai's salary bubble

Salaries across the Gulf's construction sector seem to be nearing bursting point.

Simon Hobart, managing director, Millennium Solutions.
Simon Hobart, managing director, Millennium Solutions.

In as swiftly developing an industry as Dubai's, the challenges of supplying sufficient personnel to match the pace of construction are almost as acute and varied as the logistics behind construction projects themselves. Not only are contractors facing skills shortages, but demands are being placed on them to increase salaries, and in some cases by up to 80%, in order to attract the right people for the job.

According to Simon Hobart, managing director of Millennium Solutions, a recruitment consultancy specialising in construction and engineering, while it is understandable for companies to pursue such deals - which can see project managers being paid between US $24,000 and $27,000 per month (AED 90,000-100,000) - it is not sustainable or an accurate reflection of the industry.

"That's a lot more than people should be paid, we are in construction, not building a space shuttle," he says.

Hobart adds that such salary expectations are also extending to commercial and design managers, who can now earn around $20,000 a month tax-free.

"That works out at around $235,000 a year tax-free - we're talking chairman of a major blue-chip company here; it's a strange market."

Because of this, companies are expanding their recruitment packages to encompass added benefits as a way of averting over-inflated salary hikes. A number of larger companies, such as Bovis Lend Lease and Faithful and Gould, are introducing packages that cover payment for schooling, for example, as a way of targeting married employees, says Hobart.

"The utopian candidate doesn't exist these days unless clients are willing to pay the very top end. So they are offering things such as schooling, that way people are less likely to leave the company within a year."

Another current feature of the market and a reason for concern among recruitment consultancies is the disparity of pay between various contractors who adopt a flexible approach to salary levels. "People like us have a duty to assist in stabilising the market, otherwise you are going to have a project manager earning $7,000 a month and another earning $27,000 - there shouldn't be a $20,000 difference in knowledge and ability," says Hobart.

The heightened salary expectation has been exacerbated by the fact that there have been relatively few major project announcements recently, and those involved in major projects (which typically have a 24-month programme), who are looking for their next job are aware a dearth in the market allows them to command higher rates.

"All it takes is for one or two clients to take a chance and pay $5,000 a month when before it was $3,000, and other clients will think they can earn the same money," says Hobart.

Hobart says that he has been fielding requests from interested employees looking for big money moves which will see between a 60% and 80% rise in their current deals.

Matt Cotgrove, senior consultant with construction recruitment agency, Hill McGlynn, also points to a skills shortage that is compounded by a lack of willingness to offer roles to employees without the relevant experience, regardless of their technical ability. "My key concern about the industry in the Middle East is the difficulty in finding solid project managers, quantity surveyors, health and safety personnel and planners. And the fact that it seems as if some companies would rather carry on short of staff and behind programme than consider good candidates who may not have worked on a 50-storey building," he says.

The skills shortage, coupled with inflated demands, has led to contractors and recruiters sourcing candidates from the less traditional markets of India and the Far East, where there is a wealth of personnel available with good training in engineering and construction. However, the emphasis on newer markets does not extend to the higher-profile positions.

"In my experience, yes the more senior roles are being filled by Europeans, South Africans and Americans, but is this a problem to the contractor? I don't know," says Cotgrove.

Hobart, meanwhile, points to a more entrenched reason: "It is a fact that, historically, companies which have been here for a long time primarily had European management." According to Hobart, a lot of companies are beginning to realise that technically-proficient employees, such as engineers and quantity surveyors, can be found in countries like Singapore, Malaysia and Thailand.

The issue of employees being recruited for one position and quickly shifting to another is one that has gained prominence over the last few months, with contractors bemoaning the loss of employees to consultancy positions where a five-day week for similar pay is proving too tempting. Hobart takes issue with this however, and while he admits that there is a growing problem - already tight project programmes cannot support a contractor working just five days - he believes it is nothing that hasn't existed previously. "Let's not forget that consultants have always worked five days. That's always been there but contractors are now more aware that they can jump the fence," he says.

The region as a whole is also proving to be a less attractive place to come and work, particularly with the spiralling cost of living.

"The main concern for people is housing," says Hobart.

This view is echoed by Cotgrove.

"I feel people are still keen to come to Dubai but they are becoming more aware of the rental issues and therefore want compensating for this, which can lead to inflated salary requests."

The key, says Hobart, is to sell Dubai as a whole experience, painting the picture that to come to the emirate will offer the potential to save money, gain crucial experience on big projects and come away after possibly three to five years experience.

With one eye on the future, Hobart believes that companies involved in schemes that require large numbers of employees (up to 300) should consider moving away from traditional recruitment methods, and instead consider paying a flat fee to one or two recruitment agencies to concentrate on the process and leave that company to get on with the job.

For example, Millennium Solutions was asked by Currie & Brown to employ 45 people over a 12-month period in the same way.

Furthermore, Hobart believes the constant flow of a transient workforce merely shifting from project to project needs to be re-assessed and the appearance of HR managers rather than recruitment agents within companies, with an emphasis to retain staff rather than allowing them to leave, is a positive step that needs to be taken on by more firms.

"We have got to look at companies being more stable with their employees. A few firms we deal with offer appraisal systems, which keep employees happy, as they don't want to be just another number. A lot of people still work project to project and do not feel like a company employee and want to be part of something. If you want people to get on board for the next five years you need a process that allows them to achieve what they want," he said.

Such is the market for construction personnel in Dubai, salaries have been increasing steadily to unprecedented levels.

Construction Week takes a look at what the key players on a construction site in the emirate could be earning currently. For the sake of accuracy, the figures involved are for individuals working on large projects, with good experience and have been involved with construction for a number of years.

Project managers - US $12,000 - $13,500 per month

Chartered Quantity Surveyor - $12,000 - 13,500 per month

Engineers - $8,000 - $10,000 per month

Planning engineers - $11,000 per month

N.B. All figures supplied by Millennium Solutions.

"That's a lot more than people should be paid, we are in construction, not building a space shuttle." - Simon Hobart, managing director, Millennium Solutions

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